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TMI Blog2021 (1) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... re of constructing new structure, extension or improvement of building. Therefore, Explanation 1 to section 32(1) of the Act would not be applicable to the facts of the present case.the nature of expenditure incurred by the assessee with reference to facts of each case would decide whether it is capital or revenue in nature. In the facts of the present case, after examining the details of expenditure incurred by the assessee, we are of the view that it is of revenue nature, hence, has to be allowed. Addition on account of change in revenue recognition policy - HELD THAT:- As decided in own case [ 2019 (9) TMI 1134 - ITAT MUMBAI] issue requires further examination by the Assessing Officer as the assessee needs to establish with cogent material and evidence that the change in revenue recognition policy is for bona fide reasons and necessary for carrying on its business activities in a more efficient manner - assessee has to establish that the change in revenue recognition policy is in conformity with the provisions contained under section 145(1) and (2). We are inclined to restore the issue to the Assessing Officer for de novo adjudication. Addition of dividend distribution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue before us is identical to one as decided by the co-ordinate bench of the Tribunal as stated hereinabove, we are therefore inclined to hold that part disallowance sustained by the Ld. CIT(A) is also to be deleted. Accordingly, this ground of appeal is allowed. 5. The issue raised in 2nd ground of appeal is against the order of Ld. CIT(A) confirming the disallowance of renovation expenses for office premises of ₹ 18,57,625/-. 6. The Ld. Counsel of the assessee submitted that this issue is also covered in favour of the assessee by the decision of the co-ordinate bench of the Tribunal in assessee s own case in ITA No.8674/M/2011 A.Y. 2005-06 vide para No.20 and the issue in current year may also be decided in favour of the assessee accordingly. 7. After hearing both the parties and perusing the material on record, we observe that in ITA No.8674/M/2011 A.Y. 2005-06 the co-ordinate bench of the Tribunal has decided identical issue in favour of the assessee. The operative part is reproduced as below: 20. We have considered rival submissions and perused the material on record. We have also applied our mind to the decisions relied upon. The issue before us is, whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t afresh and if the assessee can establish the change in the revenue recognition policy is for bonafide and valid reasons, the question for any addition on this count would not arise. The Ld. Counsel submitted that the current year may also be decided by restoring the same to the file of the AO. 11. After perusing the decision of the co-ordinate bench of the Tribunal and facts of the case, we find that the issue is squarely covered in favour of the assessee vide ITA No.8674/M/2011 A.Y. 2005-06 in para No. 41 to 45. The operative part is reproduced as under: 41. We have considered rival submissions and perused the material on record. We have also carefully applied our mind to the decisions relied upon before us by both the parties. The factual matrix clearly reveals that the assessee has not changed mercantile system of accounting consistently followed by it from the past years. However, it has changed its revenue recognition policy in the impugned assessment year. It is evident, in the past years, the assessee was recognising revenue on the basis of invoices raised for sales effected and service rendered. However, in the impugned assessment year, the assessee has adopt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot produced any documentary evidence regarding the global standards allegedly followed by it and how it is relevant in the context of Indian Accounting Standard. It is also crucial to bear in mind, as regards Sales Tax and Service Tax the assessee is complying to the statutory requirement in terms with the earlier practice followed by it. In other words, it is paying Sales Tax and Service Tax on the basis of invoices raised towards sales and services. 12. Accordingly following the coordinate bench decision as discussed above, we restore the issue to the file of the AO to decide in terms of the order of the co-ordinate bench of the Tribunal. The ground is allowed for statistical purpose. 13. The issue raised in 4th ground of appeal is against the confirmation of addition of dividend distribution tax of ₹ 1,23,696/-. 14. After hearing the rival contentions and perusing the materials on records we find that ld. CIT(A) has given a direction to the AO to verify the computation of dividend distribution tax after verifying the claim of the assessee from records. It appears that AO has not complied with the direction. Therefore we direct the AO to verify the claim of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of leased premise is of capital or revenue nature. On a perusal of the details of expenditure incurred, as submitted in the paper book, we are of the view that by incurring such expenditure, the assessee has not brought into existence any capital asset of enduring nature. A reference to Explanation-1 to section 32(1) of the Act, would reveal that it speaks of capital expenditure incurred towards construction of any structure or renovation or extension or improvement to the building. Thus, on a reading of the aforesaid provisions, it becomes clear that if any expenditure is incurred for construction of any structure or extension or improvement of the building taken on lease would be treated as capital expenditure. The nature of expenditure incurred by the assessee in respect of the leased premises and more particularly the premises at Hyderabad and Bangalore are not of the nature of constructing new structure, extension or improvement of building. Therefore, Explanation-1 to section 32(1) of the Act would not be applicable to the facts of the present case. Though, there cannot be any quarrel with regard to the proposition laid down in the decisions cited before us, however, the natu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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